Finding skilled staff is hard – keeping them is often harder still. The company pension (betriebliche Altersvorsorge, bAV) is one of the most effective and most underrated levers for being an attractive employer. Set up correctly, both sides win. Here are the 2026 figures and the typical mistakes.
What makes the company pension so attractive
Contributions flow from gross salary: the employee pays no income tax and no social contributions on that part, and the employer saves its share of social contributions as well. Since 2022 that saving must be passed on: an employer subsidy of 15 % of the converted salary is mandatory wherever social contributions are saved (§ 1a (1a) BetrAVG). A higher, voluntary subsidy often costs less than a pay rise – yet works just as well as a benefit.
The figures for 2026
| Rule | Value 2026 | Law |
|---|---|---|
| Tax-free contributions to direct insurance, pension fund or Pensionskasse | €8,112 per year (8 % of the pension contribution ceiling) | § 3 No. 63 EStG |
| Of which free of social contributions | €4,056 per year (4 %) | § 1 SvEV |
| Mandatory subsidy on salary conversion | 15 % | § 1a (1a) BetrAVG |
| Subsidy for low earners | 30 % of the employer contribution, max. €288 per employee and year; income limit €2,575 gross per month | § 100 EStG |
| For comparison: tax-free benefit in kind (voucher) | €50 per month | § 8 (2) EStG |
The § 100 EStG subsidy is the money most often left on the table: pay between €240 and €960 per year on top of salary for an employee earning up to €2,575 per month, and 30 % comes straight back through payroll tax. The ceiling rises every year; the 2027 values are set with the social insurance ordinance.
The typical mistakes
- No system: individual contracts across all providers lead to administrative chaos.
- No subsidy concept: giving only the legal minimum wastes the retention effect; not knowing the § 100 subsidy wastes money.
- No communication: the best scheme is useless if the team does not understand it – many employees do not even know they have a legal right to salary conversion (§ 1a (1) BetrAVG).
How to approach it
- Take stock: which commitments, contracts and subsidies already exist?
- Concept: one uniform scheme with a clear subsidy model.
- Implementation: one framework contract, clear documents, lean payroll processes.
- Communication: show the benefit with an example from the employee’s own salary – see company pension for employees.
The double win
For the company: saved social contributions, the state subsidy, lower turnover, a plus in recruiting. For the team: a subsidised supplementary pension from gross pay that is hard to replicate privately.
General information, not legal, tax or investment advice. Sources: § 3 No. 63, § 8 and § 100 EStG, § 1a BetrAVG, Social Insurance Reference Values Ordinance 2026 (contribution ceiling €8,450/month), German Pension Insurance, Haufe, Lexware – as of October 2026. Want to know what a scheme would cost and bring for your business? Get in touch – as an independent insurance broker I set it up without ties to any provider.
